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Industry and Strategy Analysis a. Porter has suggested five forces influencing the level of competition of firms in an industry. Overkill The Electric Age Rar Download there. Applying these five forces to the specialty coffee industry: i. Rivalry amount Existing Firms: This is moderate in the specialty coffee retail industry.
There are many firms in retail operations who sell a cup of coffee. But not many offer the kind of experience that specialty coffee shops like Starbucks offer. Even the ones who do offer experience with coffee, not many among have a reach with such a large network of shops like Starbucks. Threat of New Entrants: This is low in the specialty coffee retail industry. For any new entrant to grow a network of stores like Starbucks is difficult.
Also, Starbucks has positioned itself as a global brand that is widely recognized. Threat of Substitutes: This is high in the specialty coffee retail industry. Many fast-food chains with a reach as wide as Starbucks are offering coffee and other beverages along with their food products.
The beverages sold by them would be cheaper as they do not offer the specialty coffee experience. Tea and other caffeinated beverages sold in stores are also substitutes for coffee. It all depends on how easily are they accessible, how price conscious are the coffee drinkers of these specialty coffee retail stores are.
Buyer Power: This is low to moderate in the specialty coffee retail industry. Most of the buyers would come to specialty coffee for that ‘experience’. They might not be price conscious. But how much of a higher price they would be ready to pay? Or are they brand-loyal enough to stay with their preferred coffee brand. Supplier Power: This is low in the specialty coffee retail industry. This industry has a large number of suppliers but small number of buyers of a size as huge as Starbucks.